FINCAD 2012 Corporate Survey

FINCAD 2012 CORPORATE SURVEY FINCAD conducted online surveys of financial professionals working for sell-side, buy-side, and corporations from around the world. Find out their perspectives on risk management practices, challenges with respect to derivatives. 74%-81% 56% MAKE WEEKLY OR USE OTC OR EXCHANGE TRADED DERIVATIVES USE DERIVATIVES MONTHLY ADDITIONS TO THEIR PORTFOLIO SPREADSHEETS are still the most commonly used method for derivatives valuations. 62% 41% 22% Spreadsheets Counterparties Treasury Management systems 62% use them to value their derivatives, while 41% reported using counterparties as another method; 22% mentioned using a Treasury Management System. O WHAT'S IMPORTANT IN AN OTC PRICING SOLUTION? A 1 Easy to use 2 Cost-effective 3 Risk management capabilities 4 Transparency into models 5 Strong support services 6 Trade coverage Ease of use (76%) and cost effectiveness (72%) are important or very important aspects of a valuation system. These results have been consistent with the prior surveys. WHAT'S THE BIGGEST CHALLENGE WITH DERIVATIVES? 1 Hedge effectiveness 2 Accurate risk assessment 3 Transparency in financial reporting 4 Independent pricing / valuation 5 Other MOST ARE COMPLYING WITH HEDGE ACCOUNTING REGULATIONS Hedge Accounting Report 75% 73% 64% FINCAD in 2012 in 2011 in 2010 Most respondents (75%) are complying with hedge accounting regulations. This trending upwards compared to prior years (73% in 2011, 64% in 2010). However, most of these respondents (70%) are managing/ testing their hedge relationships using spreadsheets. Approximately 41% are using a hedge accounting system and 14% are using the critical terms/short-cut method. ADJUSTMENTS TO RISK MANAGEMENT STRATEGY Fewer respondents made adjustments to their risk management strategy in 2012 (35%) compared to last year's survey (31%). Of those who did, most were running scenario and/or calculating VaR. EXPECT REGULATION CHANGES WILL HAVE MAJOR IMPACT As the regulations have started to take shape, fewer expect that the changes will have a major impact (2% in 2012 vs. 6% in 2011). However, most identified that the impact will be moderate and some notable changes will need to be made (34% in 2012 vs. 30% and 27% in 2011 and 2010, respectively) IT SPENDING DOWN IN 2012 More respondents expect to decrease their IT expenditure or keep it the same for 2012 (65%), compared to prior years (59% in both 2011 and 2010 surveys). 65% 59% 59% in 2012 in 2011 in 2010 FINCAD Founded in 1990, FINCAD provides advanced modelling solutions built on award-winning, patent pending technology. With more than 4,000 clients in over 80 countires around the world, FINCAD is the leading providor of financial analytics technology, enabling global market participants to make informed hedging and investment decisions. fincad provides software and services supporting the valuation, reporitng and risk management of derivatives and fixed income portfolios to banks, corporate treasuries, hedge funds, asset management firms, audit firms and gov- ernments. FINCAD analytics can be accessed through excel, matlab, as a software-as-a-service or embedded into an existing system through software development kits. Now, over 70 fincad alliance partners embed fincad analytics within their solutions. FINCAD provides sales and client services from Dublin, Ireland, and Vancouver, Canada. INFORMATION IS BASED ON FINCAD, 2012 Corporate Survey Results. DISCLAIMER Your use of the information in this article is at your own risk. The information in this article is provided on an "as is" basis and without any representation, obligation, or warranty from FINCAD of any kind, whether express or implied. We hope that such information will assist you, but it should not be used or relied upon as a substitute for your own independent research. i:lii:

FINCAD 2012 Corporate Survey

shared by FINCAD on Jun 21
FINCAD conducted online surveys for financial professionals working for sell-side, buy-side, and corporations from around the world. Find out their perspectives on risk management practices, challenge...



Alison Chan


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